WS Retail’s 10K crore sales offer peek into Flipkart’s performance
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WS Retail, the largest seller on India’s biggest online marketplace Flipkart, nearly tripled its turnover to Rs 10,163 crore in FY15 — more than the combined sales of top brickand-mortal retailers such as Shoppers Stop, Future Lifestyle, Tata’s Trent and Aditya Birla Group’s Pantaloons.
Experts feel WS Retail’s numbers, which were submitted by the company to the ministry of corporate affairs earlier this week, offer a peek into Flipkart’s likely performance for the year to end-March 2015, given its dominant position on the e-tailer’s platform.
Cutting dependence on WS retail
Flipkart’s own annual revenue numbers are not known. “WS Retail numbers should be good barometer to the performance of Flipkart considering it gets a bulk of its sales from this seller,” said Ruchi Sally, director at retail consultancy Elargir.
The six-year-old company, originally founded by Flipkart’s founders Sachin Bansal and Binny Bansal, sells nearly 80% of its merchandise to Flipkart. Three years ago, the Bansals sold their stake to former OnMobile Global chief operating officer Rajeev Kuchhal and a clutch of investors.
WS Retail reported a net profit of Rs 67 lakh on sales of Rs 3,135 crore for fiscal year 2014, which was higher than Flipkart India’s revenue of Rs 2,846 crore for the same period, the numbers showed. Another company, Flipkart Internet, which earns commission and advertising revenues from sellers, posted total sales of Rs 179 crore last year. Both WS Retail and Flipkart didn’t respond to email queries sent by ET.
Flipkart’s head of commerce Mukesh Bansal told ET last month that Flipkart was on course to sell goods worth $10 billion (Rs 65,000 crore) during fiscal 2016. The company has in the past said it had achieved $4 billion worth of gross merchandise value or GMV, which is industry jargon for sales, last year.
“The six-year-old company, originally founded by Flipkart’s founders Sachin Bansal and Binny Bansal, sells nearly 80% of its merchandise to Flipkart.”
For years, WS Retail was the mainstay seller on Flipkart, the one encountered most by customers shopping on its platform. However, in the last year and a half, Flipkart has sought to diminish its prominence as part of its shift away from an inventoryled model to a marketplace one, even though WS Retail remains its top seller even now. Indian laws also prevent foreign-owned internet retailers — Flipkart is registered in Singapore and a majority of its ownership is held by overseas entities — from only operating inventory-based models.
While Flipkart has 60,000 sellers on the platform already, it is planning to double the count by March next year in an effort to convert itself into a pure marketplace much like the one its rival Snapdeal operates.
“Flipkart has been reducing its dependence on WS Retail in its effort to simplify its business structure. It is expected that such a step and simultaneous addition of new vendors on its website directly shall automatically reduce the trading volume of WS Retail over time,” said Rakesh Nangia, founder and managing partner at tax and transaction advisory firm Nangia & Co.
In fact, Flipkart informed several companies and brands, which sell on the site through WS Retail, to sell directly to consumers through its marketplace few months ago. However, WS Retail will continue to be the seller for Flipkart exclusives such as the Motorola and Xiaomi handsets.
Snapdeal already has 2 lakh sellers listed on its marketplace while Amazon India has nearly a lakh sellers, although in its case, Clouttail, its joint venture with NR Narayana Murthy’s Catamaran Ventures, is its biggest vendor.
A month ago, Flipkart bought back the logistics business of WS Retail, which has also seen exits of two shareholders — Meenu Gupta and Sujeet Kumar — who together held a 25.3% stake.
According to WS Retail’s annual filings for fiscal year 2015, Rajeev Kuchhal owned 49.7% stake, while one of Flipkart’s early employees, Tapas Rudrapatna, controlled another 24.8%. In fact, Rudrapatna was given Rs 24 crore as a one-time bonus for ‘increasing sales beyond targets,’ said the filing.The latest shareholding pattern after these exits and logistics business sell-off hasn’t been filed yet.
Questions & Answers
Q.How do WS Retail's sales figures compare to traditional brick-and-mortar retailers?
How do WS Retail's sales figures compare to traditional brick-and-mortar retailers?
In FY15, WS Retail's turnover of Rs 10,163 crore was higher than the combined sales of major traditional retailers including Shoppers Stop, Future Lifestyle, Tata's Trent, and Aditya Birla Group's Pantaloons.
Q.Why is Flipkart trying to reduce its reliance on WS Retail?
Why is Flipkart trying to reduce its reliance on WS Retail?
Flipkart is registered overseas, and Indian laws prevent foreign-owned internet retailers from operating solely inventory-based models. Reducing dependence on WS Retail helps Flipkart shift to a marketplace model and simplify its business structure.
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